Turkey: The Board published its reasoned decision concluding the preliminary investigation against the undertakings which are active in the lemon market

Last Updated: 4 March 2016
Practice Guide by ELIG, Attorneys-at-Law

The Board published its reasoned decision concluding the preliminary investigation against the undertakings which are active in the lemon market (10.11.2015, 15-40/664-232)

The Board published the reasoned decision regarding preliminary investigation, conducted upon the application of the Ministry of Food, Agriculture and Livestock (“Ministry”) and involving the allegation that the increase in lemon prices, especially during May-June-July, were artificially caused by limiting the level of supply in the market through stocking 1.5 million extra chest of lemon in warehouses in Nevşehir during 2015.        

In terms of the relevant product market, the Board stated that there are different sorts of lemons (namely; “Lamas Lemon”, “Black Lemon”, “Molla Mehmet Lemon”, “Cyprus Lemon”, “Kütdiken Lemon”, “Mayer Lemon” “Misket Lemon (Lime)”, etc.); but assessed that the relevant product market could be defined as the production and distribution of lemon, since the conduct in question is related to the lemon prices for the end users in general. Ultimately, the exact definition of the relevant product and geographical market was left open since this determination would not affect final outcome of the decision for the case at hand.

The Board asserted that the allegations of “creating a coordination with respect to the lemon stocking activities” would fall within the scope of Article 4 of Law No. 4054 on the Protection of Competition (“Law No. 4054”), which prohibits anti-competitive agreements. That said, the Board stated that traditionally, lemon prices would rise during summer since there is no production during these months and the demand is covered with the products that were stocked earlier. The Board also noted that the purpose of stocking lemons after production is to ensure that the demand – which lasts throughout the whole year – can be met even though production only takes place within a limited period.

The Board also noted that the alleged rises in price happened not within the period of production where the lemons which could have been sold are stocked, but rather during the period when such stocks are supplied to the market. As such, a high level of stocks would not decrease the supply but rather could even increase it during this period.

In its assessment regarding the elements which affect the level of stock, the Board stated that the quantities of the stocked lemon are mainly affected by (i) the amount of the lemon exported from the stocks and (ii) the level of rotten lemons within the stocks. In terms of the level of rotten lemons, the Board concluded that the extreme winter conditions have weakened the products and the amount of the products rotted in the stocks were greater for the year 2015. Furthermore, it was stated that the heavy rain during the harvest time has caused the degree of rottenness to exceed the usual 10% rate for the period in question. The Board assessed that this increase in the degree of rottenness in the stocks, together with the increase in in export caused by a fall in the supply of lemons supplied by Argentina; has caused the amount of products offered to the domestic market to decrease and created a pressure on the domestic prices to increase. 

Therefore, it was concluded that the allegations were neither in line with the normal operation of the market nor the fundamental economic principles. Furthermore, no evidence suggesting the existence of coordination was found during the on-site inspections conducted on the premises of the three leading undertakings active in the city of Mersin, where more than half of the lemon production is undertaken.  

As a result, the Board concluded that a full-fledged investigation on the allegations brought forward with respect to the lemon prices was not called for in this case.

This document is not intended to create an attorney-client relationship. You should not act or rely on any information in this document without first seeking legal advice. This material is intended for general information purposes only and does not constitute legal advice. If you have any specific questions on any legal matter, you should consult a professional legal services provider.

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